For many key leadership and administration staff, the long holiday weekend was anything but relaxing. It was spent negotiating a 2020-21 state budget and accompanying legislation. While a lot of work was done through the weekend, things still seem very uncertain, and we are working on sorting out timing issues—although it seems that most of the budget-related legislation could be done by the end of the week and ahead of the June 2 primary election. We’ll monitor how things are going and share updates as soon as we have them. Read on, and stay tuned for more this week!

The 2020-21 State Budget: In terms of the budget, it appears that some large chunks of the 2020-21 education budget will be flat-funded at 2019-20 levels—this appears to be the case for both BEF and SEF. We believe this means that school districts will receive what they received in both line items for the current fiscal year—they will not update the formulas with new data, as the impact of doing that without additional funding negatively impacts hundreds of districts.

We also believe that they will appropriately fund the PSERS line item, as well as Social Security (which, as a reminder, is technically rolled into the BEF line item—however, your money does NOT go through the formula and continues to be allocated as it always has in the past).

In terms of the other education line items, we expect many of them to be kicked into a two-part budget process, meaning that there will be an opportunity to negotiate those items in the fall. More to come on this when it comes clearer into focus.

Regarding other policy, the goal is to minimize the need for a School Code bill and not inject any new policy. We have heard about several items kicking around over the weekend, and it’s not clear what will end up in a final draft and what will fall away. Not unexpectedly, things seem pretty tense and discussions seem tenuous. It’s not clear where all of this is going just yet…but, it at least appears to be moving and at a pretty rapid clip.

Property Tax Relief Allocation: As if a state budget during a global pandemic and a $5 billion shortfall wasn’t enough, a mistake in terms of the property tax relief allocation has made everything a lot more complicated—especially for school districts and taxpayers.

Late last week, PDE issued a letter to school districts indicating that they would need to recertify the amount of property tax relief available for 2020-21. The original certification was posted (as required by law) on April 15, indicating that there was $621 million available (the same as in past years).

Following that certification, PDE posted the individual school district allocations and the letters—as they are required to do by May 1 each year.

It wasn’t until May 21 that school districts found out that there was not enough money in the fund. And while PDE has not yet removed the $621 million certification or the original allocations or letters from their website, we understand that the fund is short by more than $300 million or about 50%. This is disastrous for school districts and will impose an unexpected challenge for taxpayers as well, and the timing is terrible.

While there have been a lot of discussions about this—and the ridiculous way it happened and timing of the announcement—they haven’t managed to find $300 million to solve the problem, and it’s unlikely that they will.

Taxpayer Flexibility: Adding to the uncertainty facing school districts right now is the issue of taxpayer flexibility. When the House started down the pathway of mandatory property tax freezes, an alternative emerged to provide some recognition to some of the challenges taxpayers may be facing as a result of  COVID-19. The bill, House Bill 2460, was approved by the House Finance Committee last week, and it is scheduled for consideration by the full House this week—however, we expect that the bill will be amended on the floor to deal with another round of technical tweaks.

The bill would extend the property tax discount period by 30 days in every school district and would also eliminate the penalty through December 31, 2020 (or through a period of 6 months from issuance of the bill). We continue to stress the importance of the timing of this legislation if it is to move forward—if they are going to do it, they need to get it done by the end of the week. We hope to have more definitive information about this bill asap.

School Reopening Public Hearing: The House Education Committee has teed up a public hearing on the issue of reopening schools for the 2020-21 school year. The hearing is scheduled for May 28. We’ll share more information and a link to watch this hearing in the near future.